This policy brief provides a detailed overview of the guidance that the Basel Committee on Banking Supervision (BCBS) has provided to financial institutions and their supervisors, in relation to assessing, quantifying and managing climate risks under Pillars I, II and III of the Basel framework. It outlines the activities undertaken so far by ASEAN+3 supervisors and recommends specific next steps for each Basel III pillar. In particular, the policy brief recommends that financial supervisors need to set clear standards and guidelines to ensure that climate-related financial risks and wider nature-related risks are firmly on top of the agenda of individual financial institutions and that the financial system builds up resiliency against these risks. Whilst adjusting regulatory and supervisory tools to tackle these risks might be challenging, not taking action will only escalate the risks in the medium term.

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